How many times has a condominium found itself in financial difficulty due to one or more unit owners failing to pay their share of the charges? It is an all-too-common situation, which leads general meetings to resort to the instrument of an extraordinary cash reserve fund, requiring the remaining unit owners to advance the sums necessary to cover the shortfall. However, caution is warranted: not all resolutions establishing such funds are automatically legitimate. The Court of Appeal of Genoa, in judgment no. 456 of 30 April 2026, clearly restated the essential conditions that a resolution of this kind must satisfy in order to be valid — and what occurs when those conditions are not met.
The Problem: Defaulting Unit Owners and the Risk of Administrative Paralysis
Condominium arrears represent one of the principal sources of disputes in the field of condominium law. When one or more unit owners cease paying their ordinary or extraordinary charges, the condominium risks being unable to meet its common expenses: from the maintenance of installations to the payment of suppliers and utility bills. To overcome this impasse, general meetings frequently resolve to establish an ad hoc cash reserve fund, financed by the compliant unit owners, with the aim of ensuring continuity of management while awaiting settlement of the outstanding debt by the defaulting parties.
On its face, this appears to be a reasonable solution. However, its legitimacy is not self-evident and depends upon compliance with specific formal and substantive conditions.
The Genoa Judgment: The Essential Requirements for the Validity of the Resolution
The Court of Appeal of Genoa held that a general meeting resolution establishing a cash reserve fund to address arrears is legitimate only where two essential conditions are satisfied:
- The urgency must be real and present, and not merely hypothetical or prospective. It is not sufficient for the general meeting to perceive a generic risk of financial difficulty: the urgency must be actual, concrete and verifiable at the time the resolution is passed.
- The urgency must be evidenced in the minutes. It is not enough for the urgency to exist as a matter of fact: it must be documented and substantiated in the minutes of the general meeting, so that any interested party may verify the underlying grounds.
- The resolution must expressly provide for the reimbursement of sums advanced by the compliant unit owners. An anti-arrears cash reserve fund cannot become a mechanism by which unit owners who are up to date with their payments effectively subsidise the defaults of others on a non-recoverable basis: the reimbursement of advances must be guaranteed as a structural element of the resolution itself.
Should even one of these requirements be absent, the resolution is void — not merely voidable, but radically devoid of legal effect. This applies both to resolutions establishing the fund for the first time and to those subsequently intervening to modify or renew it.